The rate of return that financial investors require to hold a risky asset minus the rate of return on a safe asset is called the

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The difference between the rate of return on a risky asset and a safe asset is called the risk premium. It represents the compensation that an investor demands for taking on the additional risk associated with holding the risky asset. The real interest rate refers to the rate of return adjusted for inflation. The nominal interest rate is the stated rate of return without adjusting for inflation. The coupon rate refers to the interest rate paid on a bond, while the discount rate is the rate used to calculate the present value of future cash flows.

The Rate of Return That Financial Investors Require to Hold